Exceeding The Standard

Hershey and Exel create a winning formula at the candy maker's Eastern Distribution Center III.


For example, every six weeks the company has roundtable meetings with 10 to 12 employees from each shift from both the DC and co-pack operations. “We discuss anything they want to talk about,” says Richardson. “We’re looking for their feedback as to how things are going as well as suggestions for improvement. After the meetings, we post all of the questions with the answers. We do this in four languages as we are a multi-cultural organization and many of our associates are not fluent in English.”

“It’s very impressive to see the range of questions and the extent to which Exel goes to answer each and every one of those questions,” says Jim Grap, Hershey’s director of distribution and transportation.

Richardson adds, “There have been many suggestions that have come out of the process that we’ve implemented, so our associates know that their ideas are taken seriously. That goes a long way in building morale.”

Another program is Quick Change Improvement (QCI), in which associates submit ideas for operational improvement. “Many of the improvements in the facility are the result of these ideas,” says Richardson. “If an idea is implemented, we recognize the associate at his or her shift meeting.”

One idea that came from a QCI was to hang small yellow buoys with chains from the ceiling to indicate safe travel lanes for material handling equipment, as opposed to painting lines on the floor, which wear off over time. Plus, it’s easier for operators to see the yellow buoys.

Exel uses a labor management process that uses engineered standards and a self-funding incentive program to drive increased productivity—resulting in the need for fewer employees.

“This is a very mature site as far as the use of engineered standards,” says Exel’s Ron Murphy, senior director of operations for the consumer business unit. “We’ve managed these standards since 2002 and have some very effective employee incentives for our associates. They have an opportunity to make extra money through their own individual performance.”

Murphy adds that hourly associates who are not measured through engineered standards, such as maintenance, clerical or sanitation workers, can earn compensation from the incentive plan based on team performance. While the incentives go a long way in helping to retain employees, opportunities for career growth and professional development keep high-performers from seeking work elsewhere.

“We promote from within all the time,” says Richardson. “Between the distribution and co-pack operations, we have a total of 23 production or operation supervisors. Of those 23, 10 originally joined the company as hourly employees.”

Other morale boosters include holiday celebrations for the associates and their families. At Christmas time, there’s a party with Santa and gifts for the children and an egg hunt at Easter. Every June, Exel holds a picnic at a local park and management does all of the cooking.

In addition, the company periodically serves up pizza and ice cream on all shifts. “It’s all about employee satisfaction,” says Richardson.

TECHNOLOGY RULES

The employees keep the operation running smoothly, but at the heart of the EDC III is a powerful warehouse management system (WMS) from RedPrairie Corp., headquartered in Milwaukee. From the moment a product enters the site through the time it leaves, it is tracked electronically—no paper is used.

This has significantly reduced costs and increased productivity. For example, the WMS has replaced the need for a warehouse driver to physically walk to the warehouse office to submit and check paperwork, which saves approximately 173 days (five minutes per load x 50,000 loads a year) of inefficiency.

“This idea was actually a joint effort between Hershey and Exel and the associates,” says Richardson. “An associate pointed out how much time they were wasting, waiting for the paperwork at the office between loading and unloading the trucks. We modified the WMS so that they get the information right on their equipment-mounted terminal and they’re able to pick more freight and earn more money.”

RF technology, which is tied into the WMS, is also saving the site the equivalent of two annual full-time associates through a lift truck battery pit stop process leveraging real-time access to email.

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